United and Continental Airlines to form world's largest airline

The airline will be run by current Continental CEO Jeffery Smisek. United CEO Glenn Tilton, a longtime advocate of consolidation in the airline industry, will be chairman for up to two years, with Smisek taking over as chairman after that.

The deal will first need approval from shareholders and antitrust regulators. It's expected to close in the fourth quarter.

The new parent company will be United Continental Holdings Inc. It will be based in United's hometown of Chicago and its biggest hub will be Houston. The companies say the combined airline will have revenue of about $29 billion, and $7.4 billion in unrestricted cash.

The companies said combining would save them $1 billion to $1.2 billion a year by 2013. That includes between $800 million and $900 million of new annual revenue, partly from increased international service.